10 year fixed or carry on?

andys15

I currently have a mortgage with the post office, through the bank of ireland. About 6 months I decreased the term of the mortgage from 22 years to 11 years. I currently pay 1.49% interest plus BOE 0.5, so 1.99 in total. Nationwide are doing a 10 year fixed for 3.49%. Question is, do I do it now??????

stator

If you want the security of knowing your mortgage will be almost paid off in 10 years then yes, go for it.
If you'd prefer to take your chances and make lower payments for a while then stick with your current deal.
If you think you might want to pay off the mortgage within the next 10 years you have to be aware of the early repayment charge.

andys15

I won't see benefit unless the interest rate is 2%. How many years do people feel it will be until the interest rate is 2%? its a tricky one.

stator

People can only guess but it won't be 2% for a few years in my opinion. The 3.49% includes what the bank thinks will happen to interest rates over 10 years and they are probably better at guessing than you or I.

getmore4less

Keep the tracker and pay as if you switched.

The overpayments make the rise needed to lose out higher the longer base says below 3%.

Reducing term is usually not a good idea if no overpayment penalties just overpay.

andys15

i already reduced the term. i paid £60 for the privilege too. I kept meaning for months to overpay, and things would crop up. Therefore I reduced the term, and increased the direct debit, so I had to pay it.

botchjob

I can't see the point in that myself. But as you can obviously afford to pay your mortgage at 3.49% (so have a big comfort zone when rates do go up), why not stick with your 1.99%, but overpay to 3.49%?

I wouldn't be at all suprised if by the time the BOE rate reaches 2.99% (+0.5% = 3.49%), you'll have pretty much paid off your mortgage anyway.

getmore4less

andys15 wrote: »

i already reduced the term. i paid £60 for the privilege too. I kept meaning for months to overpay, and things would crop up. Therefore I reduced the term, and increased the direct debit, so I had to pay it.

So where does the money come from for things that crop up.

Might be a good idea to do some proper budgeting.

andys15

things no longer crop up. I would just waste the money, now I have doubled my mortgage payments, I cannot waste it.

getmore4less

So increase the rate to stop you wasting more money��

Set up a standing order for the overpayment or see if the lender will take more on the dd.

Use https://www.whatsthecost.com to get the payment at the higher rate and set up the appropriate overpayment.